Apple issued its first revenue warning in almost 12 years last night as the technology giant slashed its sales outlook for its latest quarter, blaming weaker iPhone sales in China. The statement from Apple sent a “flash crash” through global currencies after shares in the iPhone manufacturer dropped by as much as 8 percent in after-hours trade. The pound fell to an almost two-year low against the US dollar, tumbling through the $1.24 barrier to as low as $1.2455 at one point. As of just before 09:00 GMT, Sterling has recovered somewhat to trade at $1.2568.
In terms of the euro, the pound dropped to as low as €1.0993 before climbing up to €1.1045 at the time of writing.
Apple forecast $84 billion in revenue for its fiscal first quarter, which is below analysts’ estimate of $91.5 billion, according to IBES data from Refinitiv.
The Cupertino, California-based company originally forecast revenue of between $89 billion and $93 billion.
The warning marked the first time Apple had spooked investors over its revenue guidance ahead of releasing quarterly results since the iPhone was launched in 2007.
Apple blamed slowing sales in China, whose economy has been dented by uncertainty around US-China trade relations.
CEO Tim Cook said in a letter to investors: “While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China.”
In November, Cook cited slowing growth in emerging markets such as Brazil, India and Russia for lower-than-anticipated sales estimates for the company’s fiscal first quarter.
But Cook specifically said he “would not put China in that category” of countries with troubled growth.
Apple is now the highest-profile multinational corporation to warn that the economic slowdown in China could hurt its business.
Fears over the health of the Chinese economy has sparked moves from automakers such as Ford Motor Co, Hyundai Motor Co and Nissan Motor Co Ltd to cut production in the country.
But Apple has held firm on its premium pricing strategy in China despite the risk of a slower economy.
James Cordwell, an analyst at Atlantic Equities, said: “The question for investors will be the extent to which Apple’s aggressive pricing has exacerbated this situation and what this means for the company’s longer-term pricing power within its iPhone franchise.”
Published at Thu, 03 Jan 2019 08:57:00 +0000